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SB-734 Redevelopment agencies: passthrough agreements: modification.(2021-2022)

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Date Published: 03/10/2021 09:00 PM
SB734:v98#DOCUMENT

Amended  IN  Senate  March 10, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 734


Introduced by Senator Hueso

February 19, 2021


An act to amend Section 34183 of of, and to add Section 34183.1 to, the Health and Safety Code, relating to community redevelopment.


LEGISLATIVE COUNSEL'S DIGEST


SB 734, as amended, Hueso. Dissolution of redevelopment agencies. Redevelopment agencies: passthrough agreements: modification.
Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to wind down the affairs of dissolved redevelopment agencies and to, among other things, make payments due for enforceable obligations. Existing law requires the auditor-controller of each county to create within the county treasury a Redevelopment Property Tax Trust Fund and, after deducting specified administrative costs, to annually allocate moneys in that fund, as provided. Existing law requires the successor agency to dispose of all remaining assets and terminate its existence within a specified period after the final debt payment, and requires any passthrough payment obligations to cease at that time.

This bill would make nonsubstantive changes to those provisions.

Existing law requires the county auditor-controller, as a part of the wind down process, to determine the amount of property taxes that would have been allocated to each redevelopment agency if the agencies had not been dissolved and deposit this amount in a county Redevelopment Property Tax Trust Fund. Revenues in the trust fund are to be allocated to various taxing entities in the county and to cover specified expenses of the former agency, including remitting amounts in the Redevelopment Property Tax Trust Fund to specified entities in the county according to passthrough agreements between the former redevelopment agency and the taxing jurisdiction.
This bill would authorize a successor agency and one or more taxing agencies to enter into an agreement to modify the interest owed by a former redevelopment agency under a passthrough agreement that was entered into before January 1, 1994, or owed under any successive amendment of that passthrough agreement, and which is owed as interest on passthrough payments agreed to be deferred by the taxing entity under the passthrough agreement, subject to specified terms and conditions, including that the interest rate on a passthrough agreement modified under these provisions be 0%. The bill would additionally authorize an agreement to modify a passthrough agreement under this bill’s provisions to forgive up to 25% of the principal amount of outstanding deferred passthrough payment owed by the former redevelopment agency to a taxing entity. The bill would require that the computation of the amount of passthrough payments made under the above-described existing provisions take into account any modification of a passthrough agreement made under this bill’s provisions.
The bill would make legislative findings and declarations as to the public purpose served by these provisions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 34183 of the Health and Safety Code is amended to read:

34183.
 (a) Notwithstanding any other law, from February 1, 2012, to July 1, 2012, and for each fiscal year thereafter, the county auditor-controller shall, after deducting administrative costs allowed under Section 34182 and Section 95.3 of the Revenue and Taxation Code, allocate moneys in each Redevelopment Property Tax Trust Fund as follows:
(1) (A) Subject to any prior deductions required by subdivision (b), first, the county auditor-controller shall remit from the Redevelopment Property Tax Trust Fund to each local agency and school entity an amount of property tax revenues in an amount equal to that which would have been received under Section 33401, 33492.140, 33607, 33607.5, 33607.7, or 33676, as those sections read on January 1, 2011, or pursuant to any passthrough agreement between a redevelopment agency and a taxing entity that was entered into before January 1, 1994, that would be in force during that fiscal year, had the redevelopment agency existed at that time. The amount of the payments made pursuant to this paragraph shall be calculated solely on the basis of passthrough payment obligations, existing before the effective date of this part and continuing as obligations of successor entities, shall occur no later than May 16, 2012, and no later than June 1, 2012, and each January 2 and June 1 thereafter. Notwithstanding subdivision (e) of Section 33670, that portion of the taxes in excess of the amount identified in subdivision (a) of Section 33670, which are attributable to a tax rate levied by a taxing entity for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property shall be allocated to, and when collected shall be paid into, the fund of that taxing entity. The amount of passthrough payments computed pursuant to this section, including any passthrough agreements, shall be computed as in accordance with the following:
(i) The amount of passthrough payments computed pursuant to this section shall be computed as though the requirement to set aside funds for the Low and Moderate Income Housing Fund was still in effect.
(ii) The computation of the amount of passthrough payments made in accordance with this section shall take into account any modification of a passthrough agreement made pursuant to Section 34183.1.
(B) Notwithstanding subdivision (b) of Section 33670, that portion of the taxes in excess of the amount identified in subdivision (a) of Section 33670, which are attributable to a property tax rate approved by the voters of a city, county, city and county, or special district to make payments in support of pension programs or in support of capital projects and programs related to the State Water Project, and levied in addition to the property tax rate limited by subdivision (a) of Section 1 of Article XIII A of the California Constitution, shall be allocated to, and when collected shall be paid into, the fund of that taxing entity, unless the amounts in question are pledged as security for the payment of any indebtedness obligation, as defined in subdivision (e) of Section 34171, and needed for payment thereof. Notwithstanding any other law, all allocations of revenues above one cent ($0.01) derived from the imposition of a property tax rate, approved by the voters of a city, county, city and county, or special district to make payments in support of pension programs or in support of capital projects and programs related to the State Water Project and levied in addition to the property tax rate limited by subdivision (a) of Section 1 of Article XIII A of the California Constitution, made by any county auditor-controller before June 15, 2015, are valid and shall not be affected by this section. A city, county, city and county, county auditor-controller, successor agency, department, or affected taxing entity shall not be subject to any claim for money, damages, or reallocated revenues based on any allocation of such revenues above one cent ($0.01) before June 15, 2015.
(2) Second, on June 1, 2012, and each January 2 and June 1 thereafter, to each successor agency for payments listed in its Recognized Obligation Payment Schedule for the six-month fiscal period beginning January 1, 2012, and July 1, 2012, and each January 2 and June 1 thereafter, in the following order of priority:
(A) Debt service payments scheduled to be made for tax allocation bonds.
(B) Payments scheduled to be made on revenue bonds, but only to the extent the revenues pledged for them are insufficient to make the payments and only if the agency’s tax increment revenues were also pledged for the repayment of the bonds.
(C) Payments scheduled for other debts and obligations listed in the Recognized Obligation Payment Schedule that are required to be paid from former tax increment revenue.
(3) Third, on June 1, 2012, and each January 2 and June 1 thereafter, to each successor agency for the administrative cost allowance, as defined in Section 34171, for administrative costs set forth in an approved administrative budget for those payments required to be paid from former tax increment revenues.
(4) Fourth, on June 1, 2012, and each January 2 and June 1 thereafter, any moneys remaining in the Redevelopment Property Tax Trust Fund after the payments and transfers authorized by paragraphs (1) to (3), inclusive, shall be distributed to local agencies and school entities in accordance with Section 34188. The only exception shall be for moneys remaining in the Redevelopment Property Tax Trust Fund that are attributable to a property tax rate approved by the voters of a city, county, city and county, or special district to make payments in support of pension programs or in support of capital projects and programs related to the State Water Project, and levied in addition to the property tax rate limited by subdivision (a) of Section I 1 of Article XIII A of the California Constitution. The county auditor-controller shall return these particular remaining moneys to the levying taxing entity.
(b) If the successor agency reports, no later than April 1, 2012, and May 1, 2012, and each December 1 and May 1 thereafter, to the county auditor-controller that the total amount available to the successor agency from the Redevelopment Property Tax Trust Fund allocation to that successor agency’s Redevelopment Obligation Retirement Fund, from other funds transferred from each redevelopment agency, and from funds that have or will become available through asset sales and all redevelopment operations, are insufficient to fund the payments required by paragraphs (1) to (3), inclusive, of subdivision (a) in the next six-month fiscal period, the county auditor-controller shall notify the Controller and the Department of Finance no later than 10 days from the date of that notification. The county auditor-controller shall verify whether the successor agency will have sufficient funds from which to service debts according to the Recognized Obligation Payment Schedule and shall report the findings to the Controller. If the Controller concurs that there are insufficient funds to pay required debt service, the amount of the deficiency shall be deducted first from the amount remaining to be distributed to taxing entities pursuant to paragraph (4), and if that amount is exhausted, from amounts available for distribution for administrative costs in paragraph (3). If an agency, pursuant to the provisions of Section 33492.15, 33492.72, 33607.5, 33671.5, 33681.15, or 33688 or as expressly provided in a passthrough agreement entered into pursuant to Section 33401, made passthrough payment obligations subordinate to debt service payments required for enforceable obligations, funds for servicing bond debt may be deducted from the amounts for passthrough payments under paragraph (1), as provided in those sections, but only to the extent that the amounts remaining to be distributed to taxing entities pursuant to paragraph (4) and the amounts available for distribution for administrative costs in paragraph (3) have all been exhausted.
(c) The county treasurer may loan any funds from the county treasury to the Redevelopment Property Tax Trust Fund of the successor agency for the purpose of paying an item approved on the Recognized Obligation Payment Schedule at the request of the Department of Finance that are necessary to ensure prompt payments of redevelopment agency debts. An enforceable obligation is created for repayment of those loans.
(d) The Controller may recover the costs of audit and oversight required under this part from the Redevelopment Property Tax Trust Fund by presenting an invoice therefor to the county auditor-controller who shall set aside sufficient funds for and disburse the claimed amounts before making the next distributions to the taxing entities pursuant to Section 34188. Subject to the approval of the Director of Finance, the budget of the Controller may be augmented to reflect the reimbursement, pursuant to Section 28.00 of the Budget Act.
(e) Within 10 days of each distribution of property tax, the county auditor-controller shall provide a report to the department regarding the distribution for each successor agency that includes information on the total available for allocation, the passthrough amounts and how they were calculated, the amounts distributed to successor agencies, and the amounts distributed to taxing entities in a manner and form specified by the department. This reporting requirement shall also apply to distributions required under subdivision (b) of Section 34183.5.

SEC. 2.

 Section 34183.1 is added to the Health and Safety Code, to read:

34183.1.
 (a) Notwithstanding paragraph (1) of subdivision (a) of Section 34183 or any other law, a successor agency and one or more taxing entities may enter into an agreement to modify the interest owed by a former redevelopment agency under a passthrough agreement that was entered into before January 1, 1994, or owed under any successive amendment of that passthrough agreement, and which is owed as interest on passthrough payments agreed to be deferred by the taxing entity under the passthrough agreement.
(b) An agreement entered into pursuant to this section shall be subject to the following:
(1) Beginning on the effective date of the agreement entered into pursuant to this section, the interest rate for any passthrough agreement as modified pursuant to this section shall be 0 percent.
(2) The term of any passthrough agreement that is modified pursuant to this section shall not exceed 40 years from the effective date of an agreement entered into pursuant to this section.
(3) An agreement entered into pursuant to this section, in addition to modifying the interest owed on deferred passthrough payments as provided in subdivision (a), may provide for the forgiveness of up to 25 percent of the outstanding principal amount of deferred passthrough payment owed by the former redevelopment agency to a taxing entity under the passthrough agreement.
(c) A taxing entity benefiting from the resulting modification of a passthrough agreement under this section shall not be liable for, or otherwise obligated to pay, any amount under the passthrough agreement in excess of the amount provided under the passthrough agreement, as modified in accordance with this section.

SEC. 3.

 The Legislature finds and declares that Section 34183.1 of the Health and Safety Code, as added by this act, serves the public purpose of preventing undue hardship on local agencies that created former redevelopment agencies and owe substantial amounts in deferred passthrough payments to taxing entities under passthrough agreements entered into by those former redevelopment agencies. These passthrough payments, which often carry high interest rates, constrain the ability of these local agencies to provide essential public services. Therefore, the Legislature finds and declares that Section 34183.1 of the Health and Safety Code, as added by this act, does not constitute a gift of public funds within the meaning of Section 6 of Article XVI of the California Constitution.